Lobbyists for cable companies and advertisers yesterday expressed their displeasure with a proposed “click-to-cancel” regulation that aims to make it easier for consumers to cancel services.
Federal Trade Commission Chair Lina Khan has said that changes are needed because “some businesses too often trick consumers into paying for subscriptions they no longer want or didn’t sign up for in the first place.” The FTC proposed the new set of rules in March 2023, and comments from industry groups were taken this week in a hearing presided over by an administrative law judge.
NCTA-The Internet & Television Association, the primary trade group for cable companies like Comcast and Charter, said the rule would make it harder to offer deals to customers who are trying to cancel.
“The proposed simple click-to-cancel mechanism may not be so simple when such practices are involved. A consumer may easily misunderstand the consequences of canceling and it may be imperative that they learn about better options,” NCTA CEO Michael Powell said at the hearing. For example, a customer “may face difficulty and unintended consequences if they want to cancel only one service in the package,” as “canceling part of a discounted bundle may increase the price for remaining services.”
Powell said that cable company reps can usually talk customers out of canceling. “Out of millions of cancellations, complaints received by NCTA members amount to only a tiny fraction of 1 percent,” he said. “Three out of four of the cable and broadband customers who called to cancel end up retaining some or all service after speaking with an agent.”
Powell worries that retaining customers will become tougher because, he said, the FTC “proposal prevents almost any communication without first obtaining a consumer’s unambiguous, affirmative consent. That could disrupt the continuity of important services, choke off helpful information and forgo potential savings. It certainly raises First Amendment issues.”
Powell also said the cost of complying—including retraining employees and maintaining records for longer than current practice—could force cable companies to raise prices. He claimed that the FTC’s estimate of compliance costs is too low.
FTC: Sellers Must Take “No” For an Answer
The FTC said one of its proposed rules “would require businesses to make it at least as easy to cancel a subscription as it was to start it. For example, if you can sign up online, you must be able to cancel on the same website, in the same number of steps.”
Sellers would also have to obtain customer consent before they “pitch additional offers or modifications when a consumer tries to cancel their enrollment,” the FTC said. Before making those pitches, sellers would have to “ask consumers whether they want to hear them. In other words, a seller must take ‘no’ for an answer and upon hearing ‘no’ must immediately implement the cancellation process.”
The FTC also proposes that sellers be required to “provide an annual reminder to consumers enrolled in negative option programs involving anything other than physical goods, before they are automatically renewed.”
At yesterday’s hearing, the FTC also heard from the Interactive Advertising Bureau (IAB), a lobby group for the online advertising industry. “The proposed rule would disrupt the current regime by adding specific requirements dictating what auto-renewal disclosures must say and how they must be presented,” said Lartease Tiffith, the IAB’s executive VP for public policy.
Tiffith argued that the rule will burden businesses “and restrict innovation without any corresponding benefit. And as the technology develops, these prescriptive requirements will constrain companies from being able to adapt their offerings to the needs of their customers.”